The NFL's Big Score

November 16, 2004

By Ronald Grover Tailgate parties are an autumn ritual. In anticipation of gridiron glory for their favorite team, faithful fans gather in parking lots to gorge themselves on beer, burgers, and bravado. In keeping with the season, the National Football League recently held a corporate version of a tailgate outside the Culver City (Calif.) offices of its cable channel, NFL Network. The official occasion, marked with a rock band and the requisite beer and burgers was the channel's first birthday. But the anticipated victory that had the throngs worked up -- which indeed came several days later -- was a new TV contract.

On Nov. 8, the NFL announced an $11.5 billion deal with CBS (VIA), Fox (NWS), and satellite provider DirecTV (DTV). Commissioner Paul Tagliabue got credit for the TV touchdown, but as any sports fan knows, the coach isn't the only one responsible for a win. Some kudos certainly ought to go to Tagliabue's top assistant coach, Executive Vice-President Steve Bornstein, who scouts the opposition and helps him call the plays.

"MASTER STRATEGIST." The 52-year-old Bornstein is a former longtime ESPN and ABC news executive who joined the NFL in late 2002 after resigning as head of Disney's (DIS) ABC unit. Since early 2003, Bornstein has been coming up with a winning strategy to maximize the NFL's TV revenues, even as ratings for the sport have declined in recent years.

The NFL's big selling point: It draws a guaranteed 20% of the audience on Sunday afternoon -- and does especially well with the 18- to 49-year-old male audience, a favorite demographic for NFL sponsors. "Steve knows the media players. He knows their weaknesses because he was one of them for so many years," says Denver Broncos owner Pat Bowlen, chairman of the NFL's TV committee. "He's a great guy to have on our side."

Bornstein's ability to size up the media playing field led to his being named the 10th most-powerful man in sports in a recent issue of SportsBusiness Journal, which called him "a master, and unmerciful, strategist." And there's no doubt Bornstein plays to win. He and Tagliabue succeeded in getting CBS and Fox to extend their deals to show Sunday afternoon games, which were due to expire after the Super Bowl in 2006, months earlier than anticipated.

HIDDEN-BALL TRICK. How did Bornstein do it? By nurturing a relationship with NBC (GE), which was outbid for NFL broadcast rights in 1998 by CBS, but which apparently wanted back in. CBS and Fox, eager to hang on to a high-profile sport that lets them promote their primetime lineups and make affiliates happy, coughed up hikes of 25% and 30% respectively to keep the NFL through Super Bowl 2010.

Bornstein's best move was a hidden-ball trick play with DirecTV, which offers a weekly package of most NFL games to its subscribers as part of its $200 a year NFL Sunday Ticket package.

For months, Bornstein has been sweet-talking cable giant Comcast (CMCSA), which was looking to craft a cable version of Sunday Ticket in 2006, when an exclusivity deal to keep the games off cable was to expire. Earlier this year, Bornstein sold Comcast the rights to show trimmed-down versions of each week's games -- a day late -- for its growing video-on-demand audience.

RUPERT DIGS DEEPER. "They were clearly greasing the way for Comcast to come into the Sunday Ticket bidding," says Neal Pilson, president of Pilson Communications and a former president of CBS Sports. Losing exclusivity of the NFL Sunday Ticket games would be a blow to DirecTV.

Since getting the rights to the NFL package in 1995, DirecTV has signed up nearly 2 million of its 13.5 million subscribers for Sunday Ticket. Little wonder that DirecTV, which is 34% controlled by Rupert Murdoch and his News Corp., agreed to pay $3.5 billion -- a 75% hike -- over the next four years to ace out Comcast and keep the rights through 2010.

The next plays that Bornstein is cooking up for Team Tagliabue will involve expanding the NFL's cable reach -- now confined to Sunday nights on ESPN. Bornstein and Talgiabue want to offer NFL games on Thursday and Saturday nights in an abbreviated package that would begin after Thanksgiving, when college and high-school football ends and the NFL is free to expand its current offerings on Sunday and Monday nights.

PRESSURE ON DISNEY. The NFL has already had exploratory talks with NBC Universal's USA Network, Murdoch's fx channel, and Time Warner's TNT (TWX) channel about carrying Saturday and Thursday night games. But Tagliabue has hinted that if he doesn't get the money he's looking for -- maybe $300 million a year -- he might put the Thursday/Saturday package on the NFL Network, which would guarantee that more cable operators would agree to carry the channel. Bornstein would not comment, and Tagliabue would only say the NFL Network will probably carry live games down the road.

The real drama, though, will involve Bornstein's old friends at Disney. George Bodenheimer, president of Disney's ESPN and ABC Sports units, has said that his company wants to keep both ABC's Monday Night Football and ESPN's Sunday night games, but aims to wait until early 2005 to begin talks.

By re-signing CBS and Fox early, the NFL has put the pressure on Disney to negotiate sooner, figures Richard Greenfield, an analyst with Fulcrum Global Partners. He thinks there's a good chance NBC will try to pry Monday Night Football from ABC, which loses $150 million a year on the games. Another possibility: ESPN will make a play for Monday night games, spurring NBC's USA Network to take over ESPN's Sunday night slot.

PIGSKIN OVERLOAD? By the time the NFL and tens of thousands of fans convene for Super Bowl XXXIX in Jacksonville, Fla., on Feb. 6, Tagliabue and Bornstein will no doubt have sacked the TV industry a few more times and collected several billion more for the nation's hottest TV sport. Some advertisers, like Tony Ponturo, vice-president of sports marketing for longtime NFL sponsor Anheuser-Bush (BUD), worry that the NFL could be diluting its own audience.

"Folks have only so much time to devote to watching the NFL with everything else going on in their lives," Ponturo points out. Still, Ponturo says the NFL usually makes its ratings guarantees to its advertisers. Those kind of numbers make Bornstein's scouting efforts that much easier. And it helped him execute a strategy that Super Bowl-hopefuls can only envy. Grover is Los Angeles bureau chief for BusinessWeek